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Before: Shri H.S. SidhuDr. B.R.R. Kumar
ORDER Per B.R.R. Kumar, A.M.: The case was reopened u/s147 of the Income Tax Act 1961, based on the audit objection that the assessee has claimed excess depreciation. The operative part of the assessment order is reproduced below : “During the year under consideration, the assessee company is engaged in the business of construction of industrial & residential buildings, Hydel Power Project, Institutional & commercial projects on contractual basis for various private & Gov. client as in the past. During the course of assessment proceedings the Ld. AR was asked to explain as why the amount of Rs. 2000040/- being excess claim in the P&L account on account of depreciation be not withdrawn and added back to the total taxable income of the assessee. In absence of any documentary support the same is being disallowed and added back to the total income of the assessee.”
From the perusal of assessment order, it can be seen that the Assessing Officer has failed to give any reason as to how the depreciation claimed by the assessee was wrong or given any re computation of the depreciation. The ld. CIT(A) deleted the addition on the grounds that the Assessing Officer has not applied his mind and the depreciation worked out by the assessee was correct. The relevant part of the order of the CIT(A) is as under : (ii). Regarding the addition on account of depreciation, I find that the A.O. has not discussed what was the reason for treating the amount of Rs.20,00,040/- as excess depreciation. It appears that A.O. has not calculated the rate of depreciation and also not considered the sub-section (iia) of section 32(1) by which additional depreciation @20% was allowed with certain restrictions. Without appreciating full facts of the issue, Ld. Assessing Officer mechanically accepted the view of the audit party and added Rs.20,00,040/- without applying his mind. The additional depreciation claimed by the appellant was as under: (i) Plant 8t machinery Rs.9,84,671/- (ii) Shuttering Material Rs.3,13,504/- (iii) Office Equipment Rs. 2,360/- (iv) Tippers/Trolly Rs.6,99,506/- After considering these details, I find that the nature of the business of the appellant is construction and it is a regular contractor, hence the plant & machinery, shuttering material and trippers / trolly are coming under the head "Plant & Machinery" and additional depreciation is allowable. However, appellant has wrongly claimed additional depreciation on office equipment amounting to Rs.2,360/-. In view of this, I find that only disallowance required by the assessing officer was Rs.2,360/”
We have perused the record and heard the arguments of both the parties. The depreciation claimed by the assessee on the block of assets is as under: Block 15% -Block 60% - Block 5% -Furniture & Fittings 10% - Total Depreciation 57,29,913 1,22,369 416 20,204 58,72,902 It was argued that the amount of Depreciation claimed as per Computation of Income under Schedule BP at page 12 point No.l2(i) of the Return of Income is Rs.58,72,902. The ld.CIT(A) after going through the details held that depreciation has been correctly calculated and disclosed at page No. 14 & 16